The story so far: A war of words recently broke out between the Congress and the BJP over the Centre’s move to cancel the Foreign Contribution (Regulation) Act (FCRA) licence of two NGOs associated with the Gandhi family, for alleged violations and irregularities, making them ineligible to receive foreign funds. Registration under the Act is mandatory for any such foreign donations.
The two organisations, Rajiv Gandhi Foundation (RGF) and Rajiv Gandhi Charitable Trust (RGCT), are headed by former Congress president Sonia Gandhi. Congress MP Rahul Gandhi and party general secretary Priyanka Gandhi Vadra are also associated with non-profit organisations. Following the cancellation of registration, , the BJP said that this exposed corruption and added that the Gandhi family and organisations linked to it can’t be above law.
Congress shot back, alleging that the government was recycling old charges to “defame and divert” attention from real issues.
What is the FCRA and how does it control foreign donations?
First enacted in 1976, the FCRA regulates how individuals and organisations receive foreign donations and ensures there is no acceptance or utilisation of such funds for “activities detrimental to the national interest”. The Act applies to all citizens of India, living in the country or abroad, and associated branches abroad of a company registered or incorporated in India, including NGOs and groups, which intend to receive foreign donations. All NGOs are required to register themselves under the FCRA. The registration is initially valid for five years and the organisations have to apply for a renewal. If an NGO or an individual registered under FCRA fails to apply for a renewal of its licence within six months before the expiry, the registration is considered expired. The association has to then reapply for registration.
The Act was amended in 2010 to introduce new measures to regulate foreign donations in the country. A decade later, the FCRA was amended again to give the government tighter control over the utilisation of foreign funds by NGOs. The changes, which imposed conditions on the receipt and use of funds by the non-profit bodies, included a provision that made it mandatory for such organisations to receive foreign funds in a designated bank account.
The portion of receipts allowed as administrative expenditure was also capped at 20%, down from 50%. The amendments came under heavy criticism as NGOs alleged that the changes had crippled their work. The matter reached the Supreme Court.
In 2022, the top court upheld the constitutional validity of the 2020 amendments. The court observed that receiving foreign donations cannot be an absolute or even a vested right and that the ”strict regime” had become essential due to the experience of “abuse” of foreign contributions.
Who can receive funds under FCRA and where?
A person or organisation is eligible to receive foreign donations if it has a “definite cultural, economic, educational, religious or social programme”, has obtained an FCRA registration, or has prior permission from the Central Government. The receipt of foreign contributions has to be done in a designated ‘FCRA account’ in the Main branch of the State Bank of India, Sansad Marg in New Delhi. Election candidates, journalists, judges, government servants, legislature members, political party leaders and office-bearers are barred from accepting foreign contributions, according to Section 3 of the Act.
Who can cancel the licence and when?
The Central Government holds the right to cancel or suspend FCRA registration of an organisation if irregularities are found, or there is a violation of norms under the Act. “Any person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior permission for three years from the date of cancellation of such certificate,” the Act says.
In case there is an “adverse input” against the functioning of an association or irregularities are found during an inspection, the MHA can also order the suspension of the licence. The Centre can initially suspend the certificate for a maximum of 180 days. The suspension period can later be extended for another 180 days. Until a decision is taken on suspension, the organisation or registered individual can’t receive a fresh donation, or utilise more than 25% of the amount available in the designated bank account without prior approval of the Centre. The remaining 75% can only be utilised after revocation of suspension.
As of October 26, 2022, the registration of 20,690 associations has been cancelled for violations, while 16,548 are active.
Why did the MHA cancel the registration of the NGOs?
About the organisations: The Rajiv Gandhi Foundation was set up in 1991 to focus on literacy, the promotion of science and technology, empowerment of the underprivileged and handicapped, etc. Presently, Ms. Gandhi heads the RGF, according to its website. The Board of Trustees includes former PM Dr. Manmohan Singh, Congress leaders P. Chidambaram, Rahul Gandhi and Priyanka Gandhi Vadra.
The Rajiv Gandhi Charitable Trust, meanwhile, was established in 2002 to “realise Rajiv Gandhi’s vision of an inclusive India”. It works towards women’s empowerment and elimination of preventable blindness. While Ms. Gandhi is the chairperson of the Trust, Rahul Gandhi is a Board member. The Bill and Melinda Gates Foundation is one of the biggest donors to RGCT.
The controversy: The Rajiv Gandhi Foundation and the Rajiv Gandhi Charitable Trust came under the scanner around two years back after the ruling BJP accused the two Congress-linked NGOs of receiving foreign funds from the Chinese government in 2005-06.
The allegations came in the wake of Congress’ attack on the Narendra Modi-led NDA government after the Galwan incident, in which 20 Indian soldiers were killed in a clash with the People’s Liberation Army (PLA) of China.
The MHA formed an inter-ministerial panel in July 2020 to investigate violations of multiple legal provisions in three Gandhi family-linked organisations which included the RGF and RGCT. The focus was to probe the alleged manipulation of documents while filing income tax returns and money laundering of foreign donations. The decision of the MHA to cancel the registration of the two NGOs was based on the probe carried out by the committee. “There were several irregularities by the two NGOs in the way the FCRA registration was being used; following the probe, the registration was cancelled,” an official said.
Annual returns filed in 2021 show that the NGOs did not receive any foreign donations in fiscal 2020-21. Their account balance, meanwhile, stood at Rs 11.5 crore for the RGCT and ₹13.5 crore for the RGF.
- A decade later, the FCRA was amended again to give the government tighter control over the utilisation of foreign funds by NGOs.
- A person or organisation is eligible to receive foreign donations if it has a “definite cultural, economic, educational, religious or social programme”, has obtained an the FCRA registration, or has prior permission from the Central Government.
- The Central Government holds the right to cancel or suspend the FCRA registration of an organisation if irregularities are found, or there is a violation of norms under the Act.
Published - October 27, 2022 01:30 pm IST
